BP oil spill payments to resume after fee wrinkle

January 5, 2012 12:32:00 PM

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By CAIN BURDEAU

Associated Press

NEW ORLEANS -- Payments to those damaged by BP's massive oil spill in the Gulf of Mexico resumed Wednesday, a day after administrators of the $20 billion fund stopped the flow of money, saying they were unclear on how to assess a 6 percent fee for lawyers handling claims.

On Wednesday, U.S. District Judge Carl Barbier said payments made after Dec. 30 would have to include a 6 percent fee for trial lawyers affiliated with a steering committee helping plaintiffs with oil spill litigation against BP PLC.

The Gulf Coast Claims Facility said it froze payments on Tuesday in response to the Dec. 28 ruling that said disbursements made on and after Nov. 7, 2011, should include the fee.

Barbier's clarification on Wednesday spared the facility the prospect of asking 9,000 people compensated in November and December to pay for attorneys' fees. About $260 million had been paid to claimants between Nov. 7 and the end of December, the facility said. Nov. 7 was the date when plaintiffs' attorneys first asked the court to establish a fund to cover fees.

The oil spill began after the April 20, 2010, explosion aboard the BP-leased drilling rig Deepwater Horizon off the southeastern Louisiana coast. The explosion and fire that burned for two days killed 11 workers aboard the rig that sank after two days.

More than 200 million gallons of oil flowed from the well a mile below the Gulf surface before it was capped in July, soiling coastal habitat, fouling fishing grounds and causing a near-panic for Gulf Coast businesses reliant on tourism.

BP set up the $20 billion fund to compensate victims. So far about $5.8 billion in damages has been paid.

The issue of attorneys' fees remains contentious.

The Louisiana attorney general and lawyers not affiliated with the steering committee say they plan to appeal Barbier's ruling. Under it, 4 percent of payments to Louisiana will have to be set aside to cover attorneys' fees. The state opposes that.

Mike Stag, a lawyer not with the steering committee, questioned why his clients -- hundreds of whom are settling their claims outside of federal court -- should have to pay into the attorneys' fund. Stag said he represents about 1,000 people and businesses across the Gulf Coast. He said his law firm went to great lengths to prove his clients' cases without any help from the steering committee. He said Barbier's ruling left many questions open about how to pay fees.

"We are concerned about fairness and about delay," he said. "We don't think it's beneficial to the clients"

Steve Herman, a lead attorney on the steering committee, said any move to overturn Barbier's ruling was an "effort to refight an issue that has already been decided by the court."

The steering committee and its associates are made up of about 340 lawyers from 90 firms who are working on the sprawling legal case against BP on behalf of more than 120,000 claimants. In court filings, the lawyers say that they have spent 230,000 hours and $11.5 million on the case, and that an escrow account should be set up to pay them for their work.

Lawyers not affiliated with the steering committee said Barbier's order unfairly compensates those lawyers who are part of it.

Louisiana lawyer Daniel Becnel questioned how much work the steering committee attorneys have actually done. He said much of the legal work against BP was accomplished during Coast Guard and congressional hearings and investigations. He said the committee has duplicated that work.

"You have to do something to get your attorneys' fees," said Becnel, who is not part of the steering committee. "We're all beside ourselves."

Herman, for the steering committee, said that the Coast Guard investigation and testimony were not "generally admissible" in civil court "so facts and opinions had to be independently established."

Meanwhile, BP, Transocean Ltd., Halliburton and other companies involved in the spill have blamed each other in lawsuits. Civil and criminal investigations into who is responsible for the nation's worst offshore oil spill are ongoing.

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